The concept
of a lottery was invented in Italy in the 1500’s and
played in some part of the world continuously since that
time. Originally they were ‘passive’ lotteries
meaning the numbers were preprinted on the ticket and after
the tickets were sold there was a drawing to select the
winner and he was paid the prize. Consumers didn’t
object to the money retained by the operator since it was
originally for some useful and public project from which
all would benefit. More importantly the prize was a thousand
or more time greater than the cost of a ticket so the excitement
of a quick and easy profit was compelling.
The US Congress utilized lotteries in the late 18th and
early 19th century to raise funds for the Government (a
hundred years before the income tax was implemented).
The concept grew rapidly and many public and private lotteries
were started but not all were legitimate. Eventually legislation
was passed banning lotteries in most of the US.
In 1964 New Hampshire passed a law authorizing a State
lottery. The idea was slow to catch on but other States
picked up on the idea over the years.
The first multi –state lottery, Tri State Mega
Bucks, was organized by New Hampshire, Maine and Vermont.
in the late 1970’s. They are geographically proximate
and much smaller than neighboring Massachusetts. Presumably
they wanted to capture sales of their residents who had
been driving to adjacent Massachusetts to buy tickets.
In 1987 the Multi-States Lottery Association was formed
by seven states: Kansas, Iowa, Missouri, Rhode Island,
West Virginia, Oregon and Washington DC. They initiated
Lotto America the next year but in 1992 changed the name
to Powerball. They also perfected the “progressive”
lottery feature which became very popular because the
winning tickets were very high if not enormous. A certain
percentage of the sales are set aside for the jackpot,
and if that is not won in the drawing it is carried forward
to the next drawing. This continues until it is won. They
have carefully designed the rules of the game so the odds
are high, but can be won eventually if enough drawings
are held and enough tickets sold. Over the years they
have increased the odds against winning by requiring more
numbers out of a larger range as shown below:
| |
1995 |
2005 |
| Number of picks/range |
5/45 |
5/55 |
| Powerball :one out of: |
1/49 |
1/42 |
| Odds against winning ,million to one
|
60 |
146 |
The odds have to be generally in line with
the number of tickets sold and population. If they’re
not, nobody will win and players quit buying tickets. Secondary
prizes are paid according to how many numbers you matched
plus whether you got the Powerball.
The game was so successful the remaining
States were losing ticket sales to Powerball states especially
the adjacent states: New Yorkers went to Connecticut; Massachusetts
residents went to Rhode Island, etc. In 2002 eleven states
formed a competing group, Mega Millions.
In 2004 Euro Millions was formed by nine
European countries thereby completely validating the superior
appeal of multi-jurisdictional, progressive lotteries.
The global lottery market now includes 135 jurisdictions
and $120 billion per year in ticket sales.
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